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Tag: Federal Board of Revenue

The Federal Board of Revenue is Pakistan’s apex tax agency, overseeing tax collection and policies. Pakistan Revenue is committed to providing timely updates on the Federal Board of Revenue to its readers.

  • Sugar mills monitoring: ECC approves Rs350 million for VAS purchase

    Sugar mills monitoring: ECC approves Rs350 million for VAS purchase

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved Rs350 million for procurement of Video Analytics System (VAS) to monitor production of sugar mills.

    Federal Minister for Finance and Revenue, Dr. Abdul Hafeez Shaikh, chaired the meeting of the ECC.

    The Federal Board of Revenue (FBR) presented a summary regarding procurement of VAS for proper monitoring of the production and sale of sugar in compliance with the directive of the prime minister.

    “The ECC approved an allocation of Rs350 million as a Technical Supplementary Grant for installation of the most optimal VAS solution at the sugar mills’ premises during the current crushing season as requested by the FBR,” a statement said.

    Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Omar Ayub Khan, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Revenue Dr. Waqar Masood, SAPM on Power Tabish Gauhar, Governor State Bank Reza Baqir, Chairman FBR and Chairman Board of Investment participated in the meeting.

    Secretary, Ministry of Energy briefed the ECC about the detailed report by the Implementation Committee regarding conversion of MOUs into Agreements with IPPs to devise a payment mechanism for clearing outstanding payables.

     The Implementation Committee has agreed the payment mechanism with the 46 IPPs to clear the outstanding dues as on 30th November, 2020.

    The ECC commended the efforts made by the Implementation Committee and acknowledged the input of all concerned including Federal Minister for Energy, Federal Minister for Planning, SAPM on Power, Finance Division, Chairman Federal Land Commission, SAPM on Revenue, Governor SBP etc in working out a viable payment mechanism with the IPPs which will eventually save approximately Rs836 billion for the government over the average life of the projects.

    The ECC approved the report of the Implementation Committee with a direction to present the same before Cabinet for final approval.

  • FBR issues draft rules for enrollment in Pakistan Single Window

    FBR issues draft rules for enrollment in Pakistan Single Window

    ISLAMABAD: Federal Board of Revenue (FBR) on Monday notified draft rules for enrollment in Pakistan Single Window (PSW) for the facilitation of trade and business.

    The FBR issued SRO 164(I)/2021 to notify draft amendments in Customs Rules, 2001.

    The revenue body invited feedback from the stakeholders within 15 days for finalization of the proposed rules.

    According to the draft rules:

    “431A. Enrollment in Pakistan Single Window (PSW).- (1) Subject to electronic verification, the subscribers who are required to be enrolled in the Customs Computerized System by electronic means through the Pakistan Single Window (PSW) interface shall, for obtaining unique user identifier (HID), follow the process outlined hereinafter, namely:-

    (a) the subscriber shall provide the following particulars through the electronic interface of PSW:-

    National Tax Number (NTN), Free Tax Number (FTN) and Sales Tax Registration Number (STRN);

    in case of a company Securities and Exchange Commission of Pakistan (SECP)’s Registration Number or Computer-Generated Unique Identification Number (CUIN);

    Subscriber identification module (SIM) card number or by such other name registered in the name of the subscriber;

    Biometric verification from the National Database and Registration Authority’s e-Sahulat centers;

    Email address of the subscriber as appearing in IRIS; and digital bank account number duly authorized by State Bank of Pakistan.

    (b) the PSW interface shall through electronic means verify the particulars listed above which may include NTN, CUIN, and SIM card and Bank account number etc. from the concerned authorities and issue One Time Password (OTP) via registered email and SIM card number;

    (c) subscription fee shall be charged by the PSW through digital means as per clause (a) of rule 426; (d) the PSW system shall by electronic means issue UID to the eligible subscribers fulfilling the requirements as per clauses (a), (b) and (c) ;

    (e) the UID of the subscriber shall remain valid and active for a period of two years or as may be determined, however, a notice not less than fifteen days before the inactivation of the UID shall be given to the subscriber before deactivating his UID, whether through electronic or manual means. The Collector of Customs having jurisdiction may however, immediately deactivate  the UID of a subscriber for reasons to be recorded in writing;

    A subscriber whose UID got deactivated through lapse of time or persistent not use of not less than two years, shall reapply for subscription in the same manner as a new subscriber applies for UID which shall inter alia include payment of subscription fee afresh;

    The subscriber having a valid and active UID shall be entitled to avail all the privileges made available in the Subscription Module of the PSW;

    Customs agents as licensed under section 207 of the Act shall be allowed to tie onetime goods declaration in respect of persons having a valid Computerized National Identity Card Number after approval from an officer not below the rank of an Assistant Collector having jurisdiction and provision of the particulars listed in clause (a)-above; and

    Any subscribers, not appearing on the Active Taxpayers List of either Income Tax or Sales Tax, shall be allowed issuance of UID, however, during the time of their inactive status they shall not be allowed any exemptions or concessions etc., as the case may be.

    (2) The subscriber shall be responsible for the authenticity of the information provided, security of his password, data shared or retrieved from the PSW, ethical use of the system and any failure to exercise due care in the use of PSW or compromising its digital systems or conniving with any person who intend to get unauthorized access to the PSW, shall be liable to penal action under the law for the time being in force. No subscriber shall assign, sublet or allow any person to use his biometric verification, NTN, password, SIM card number or any other particulars under any circumstances whatsoever and such subscriber shall be responsible for using any of his digital particulars for the purposes of subscription only to extent relevant to the PSW interface.

    (3) In order to facilitate, educate or assist the subscribers of PSW, the Model Customs Collectorates listed below shall designate an officer not below the rank of an Assistant Collector as Assistant Collector (Facilitation) namely: –

    Model Customs Collectorate of Appraisement and Facilitation (East-Karachi)/Quetta/Lahore/Peshawar/Faisalabad;

    Model Customs Collectorate Gwadar/Hyderabad/Sialkot/Islamabad/Gilgit: Baltistan; and

    Model Customs Collectorate of Enforcement and Compliance, Multan.

    (4) This rule shall apply to all the subscribers of the Customs Computerized System through the PSW interface till such time and to such categories of subscribers as the Board may determine.”

  • Income tax law defines amalgamation

    Income tax law defines amalgamation

    The word ‘amalgamation’ has been defined under Income Tax Ordinance, 2001.

    The Ordinance updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR) has defined the word ‘amalgamation’ as:

    “Amalgamation” means the merger of one or more banking companies or non-banking financial institutions, or insurance companies, or companies owning and managing industrial undertakings or companies engaged in providing services and not being a trading company or companies in either case at least one of them being a public company, or a company incorporated under any law, other than Companies Ordinance, 1984 (XLVII of 1984), for the time being in force, (the company or companies which so merge being referred to as the “amalgamating company” or companies and the company with which they merge or which is formed as a result of merger, as the “amalgamated company”) in such manner that –

    (a) the assets of the amalgamating company or companies immediately before the amalgamation become the assets of the amalgamated company by virtue of the amalgamation, otherwise than by purchase of such assets by the amalgamated company or as a result of distribution of such

    assets to the amalgamated company after the winding up of the amalgamating company or companies; and

    (b) the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation.

  • What is taxable activity under Sales Tax Act?

    What is taxable activity under Sales Tax Act?

    The Sales Tax Act, 1990, as updated by the Federal Board of Revenue (FBR) up to June 30, 2020, clearly defines the term ‘taxable activity’ for the purpose of determining liability under the sales tax regime.

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  • Retail price defined under Sales Tax Act

    Retail price defined under Sales Tax Act

    Sales Tax Act, 1990 has defined ‘retail price’ as a price fixed for sales of goods to the end consumers.

    The Sales Tax Act, 1990 [updated up to June 30, 2020 issued by the Federal Board of Revenue (FBR)] defines the ‘retail price’ with reference to the Third Schedule of the Act, as the price fixed by the manufacturer or importer, in case of imported goods, inclusive of all duties, charges and taxes (other than sales tax) at which any particular brand or variety of any article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest of such price:

    Provided that the FBR may through a general order specify zones or areas for the purpose of determination of highest retail price for any brand or variety of goods.

    The Act also defines the work retailer as a person supplying goods to general public for the purpose of consumption:

    Provided that any person, who combines the business of import and retail or manufacture or production with retail, shall notify and advertise wholesale prices and retail prices separately, and declare the address of retail outlets.

  • Registered person defined under sales tax

    Registered person defined under sales tax

    Sales tax laws have defined ‘person’ for determining transactions i.e. supplies and purchases and application of sales tax rate.

    The Sales Tax Act, 1990 [updated June 30, 2020 issued by the Federal Board of Revenue (FBR)] explained the following:

     (21) “person” means,–

    (a) an individual;

    (b) a company or association of persons incorporated, formed, organized or established in Pakistan or elsewhere;

    (c) the Federal Government;

    (d) a Provincial Government;

    (e) a local authority in Pakistan; or

    (f) a foreign government, a political subdivision of a foreign government, or public international organization;]

    (22) “prescribed” means prescribed by rules made under this Act;

    (22A) “Provincial sales tax” means tax levied under, Provincial laws or laws relating to Islamabad Capital Territory, which are declared by the Federal Government, through notification in the official Gazette to be Provincial Sales Tax for the purpose of input tax;

    (23) “registered office” means the office or other place of business specified by the registered person in the application made by him for registration under this Act or through any subsequent application to the 2[Commissioner];

    (24) “registration number” means the number allocated to the registered person for the purpose of this Act;

    (25) “registered person” means a person who is registered or is liable to be registered under this Act:

    Provided that a person liable to be registered but not registered under this Act shall not be entitled to any benefit available to a registered person under any of the provisions of this Act or the rules made thereunder.

  • What is output tax under Sales Tax Act?

    What is output tax under Sales Tax Act?

    Sales tax law has defined output tax as a supply of goods, made by the person.

    The Sales Tax Act, 1990 (updated June 30, 2020) issued by the Federal Board of Revenue (FBR) has defined output tax in relation to a registered person as:

    (a) tax levied under this Act on a supply of goods, made by the person;

    (b) tax levied under the Federal Excise Act, 2005 in sales tax mode as a duty of excise on the manufacture or production of the goods, or the rendering or providing of the services, by the person;

    (c) sales tax levied on the services rendered or provided by the person under Islamabad Capital Territory (Tax on Services) Ordinance, 2001 (XLII of 2001).

  • Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

    Jewelers making cash transactions above Rs2 million liable to comply with FATF conditions: FBR

    ISLAMABAD: The Federal Board of Revenue (FBR) has said that jewelers making cash transactions with their buyers and sellers above Rs2 million are liable to monitoring under Anti-Money Laundering (AML)/Countering Financing of Terrorism (CFT), sources said on Thursday.

    In this regard the FBR issued guidelines for persons dealing in precious stones and metals.

    The procedures have been issued under anti money laundering (AML) and combating financing of terrorism (CFT) and to meet conditionalities of Financial Action Task Force (FATF).

    A jeweler is required to retain record of such transactions for at least five years following the completion of a transaction.

    Bringing Designated Non-Financing Business and Professions (DNFBP) into AML/CFT laws is one of the major requirements of the FATF. The FBR on September 29, 2020 issued SRO 924(I)/2020 to notify regulations namely Anti-Money Laundering and Countering Financing of Terrorism Regulations for DNFBPs, 2020.

    The DNFBPs have been defined as real estate agents, jewelers and accountants.

    The latest procedure for compliance by jewelers has also been issued to make this segment into money laundering free business.

    The sources said a person engaged in the business of precious stones is not subject to AML/CFT if he is selling or buying jewellery below Rs2 million in cash.

    According to the procedures issued by the FBR, if a person is a retail merchant and selling or buying jewellery e.g. rings, bracelets, necklaces and other bodily ornaments may not be a Dealers in Precious Metals and Stones (DPMS) in one year or one month, but the person starts selling or buying such items over Rs2 million threshold, in subsequent years or months, the person would be subject to AML/CFT.

    The FBR interprets the Rs2 million threshold as a cash transaction below threshold amount, if the cash transaction is below Rs2 million but is part of a series of transactions related to the purchase of the same item or items totaling Rs2 million or above.

    The revenue body said that the business of precious stones and metals may be abused by criminals and terrorists because of a number of factors.

    “They can be of very high value, but still very small and therefore very easy to carry, transport and conceal. Transferring ownership does not require any formal registration process unlike for real estate, motor vehicles or share ownership,” the FBR said, adding that the holder of the precious stone and metal is the owner and can be held anonymously without a need for records to be kept.

    “In terms of gold, it can be considered as a universally accepted currency and therefore, investing in gold to launder illegal earnings would be easy as well as profitable,” the FBR added.

    The FBR also issued similar procedures for real estate agents and accountants.

  • Definition of manufacturer or producer under Sales Tax Act

    Definition of manufacturer or producer under Sales Tax Act

    A definition of manufacturer of producer has been included into the Sales Tax Act, 1990 (updated up to June 30, 2020) issued by the Federal Board of Revenue (FBR).

    According to the definition “manufacturer” or “producer” means a person who engages, whether exclusively or not, in the production or manufacture of goods whether or not the raw material of which the goods are produced or manufactured are owned by him; and shall include –

    (a) a person who by any process or operation assembles, mixes, cuts, dilutes, bottles, packages, repackages or prepares goods by any other manner;

    (b) an assignee or trustee in bankruptcy, liquidator, executor, or curator or any manufacturer or producer and any person who disposes of his assets in any fiduciary capacity; and

    (c) any person, firm or company which owns, holds, claims or uses any patent, proprietary, or other right to goods being manufactured, whether in his or its name, or on his or its behalf, as the case may be, whether or not such person, firm or company sells, distributes, consigns or otherwise disposes of the goods :

    Provided that for the purpose of refund under this Act, only such shall be treated as manufacturer-cum-exporter who owns or has his own manufacturing facility to manufacture or produce the goods exported or to be exported.

    It further explains “manufacture” or “produce”, which includes:

    (a) any process in which an article singly or in combination with other articles, materials, components, is either converted into another distinct article or product or is so changed, transformed or reshaped that it becomes capable of being put to use differently or distinctly and includes any process incidental or ancillary to the completion of a manufactured product;

    (b) process of printing, publishing, lithography and engraving; and

    (c) process and operations of assembling, mixing, cutting, diluting, bottling, packaging, repacking or preparation of goods in any other manner.

  • FBR exempts entire sales tax on import of 52 fire tenders

    FBR exempts entire sales tax on import of 52 fire tenders

    The Federal Board of Revenue (FBR) announced on Wednesday the exemption of sales tax and additional sales tax on the import of 52 fire-fighting vehicles.

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